The Big Push founder Sharon Zohar has been involved in entrepreneurial ventures for two decades in a variety of industries. “I realized that a critical stage for myself was being able to bridge the gap to get products to market. At that moment you need seven different types of arms to get to that stage. That’s where the trouble always began.”

Venture capital support for female entrepreneurs has been, and continues to be, dismal, she adds. “Female entrepreneurs receive less than three per cent of available venture funding, despite owning 38 per cent of businesses. Research has also shown that women-led technology companies achieve 35 per cent higher ROI and 56 per cent higher revenue when backed by venture capital.”

Zohar’s mission with The Big Push is to “turn this around” and help women entrepreneurs get to Series A financing. While The Big Push does provide funding in specific circumstances, the uniqueness is in the sweat equity component: selected startups receive from $50,000 to $100,000 in professional services in exchange for three to five per cent equity.

The executive women on the team go beyond mentorship. They do the heavy lifting to help startups create a strategic plan that gets them suited up for investment, Zohar explains. Each member has committed to provide a minimum of 15 hours of services a month.”

The first startup in the portfolio is Artery, a platform that connects creative people to unexpected venues and intimate audiences. Artery CEO and co-founder Salimah Ebrahim says that in her early conversations with The Big Push, it was the value-added services that most excited her. “These women have been chewing on issues such as marketing, PR and building pipelines for a long time. The biggest issue for any startup is time. The Big Push can accelerate the process, make calls, and expedite interviews – all of that stuff really helps. Before we concluded the agreement, they were already making introductions instead of just furnishing their agenda.”

When not offering her services to The Big Push, Khanna does full-time finance and operations for Uberflip, a content experience marketing company in Toronto. In joining TBP, she believes she can do more than just mentor. “I don’t just coach from behind the bench. I suit up, get on the ice and really get into it.”

As she is a full-time executive, Khanna says it was essential that the model be flexible to accommodate seasonal demands at her firm, and that she have the support of her president and co-workers. “He gets that people have things outside of the work world, and I get a lot of support from the people I work with. Before making the commitment, I also needed to be comfortable with (putting in) 15 hours of work a month on a project.”

Khanna’s area of expertise is business metrics, which can help startups through various stages of growth. “A lot of us take this stuff for granted. But for a startup, they may not know how to get people to notice them, or what happens when they do become successful. They have to plan for these things to happen.”

In looking back on her own career, Khanna says this kind of hands-on help would have been highly valuable. “It would have been better than meeting a mentor for coffee and being told ‘This is how I do it.’ When women entrepreneurs are taking their first big steps, it’s important they have people like us around to fill in the gaps of what they don’t know.”

]]>http://business.financialpost.com/entrepreneur/the-big-push-women-trade-professional-services-for-equity/feed0aPJT-Sharon_Zohar-2_denisedeveaufpStitch Fix’s Katrina Lake did more with less funding from VCs than typical IPOshttp://business.financialpost.com/entrepreneur/stitch-fixs-katrina-lake-did-more-with-less-cash-from-vcs-1121-bc-stitch-fix-s-katrina-lake-did-more-with-less-cash-bloom-656-words-f-11-17-17-0459-pm
http://business.financialpost.com/entrepreneur/stitch-fixs-katrina-lake-did-more-with-less-cash-from-vcs-1121-bc-stitch-fix-s-katrina-lake-did-more-with-less-cash-bloom-656-words-f-11-17-17-0459-pm#respondMon, 27 Nov 2017 14:19:04 +0000https://financialpostcom.wordpress.com?p=1497804&preview=true&preview_id=1497804Katrina Lake became the first female chief executive officer to take a company public in the U.S. this year when Stitch Fix Inc. started trading 10 days ago. Almost more unusual is the fact she did it with a fraction of the cash of most venture-backed companies: The online subscription apparel retailer had raised just US$42 million.

Lake had to do more with less because women entrepreneurs are at a disadvantage when raising money from mostly male venture capitalists. A Bloomberg study last year showed that women founders got about $3 for every $4 that male founders raised. Just seven percent of founders in the U.S. are women.

But Stitch Fix’s IPO shows that this funding shortfall can sometimes be an advantage in a startup environment brimming with cash.

“Female founders are much more focused on capital efficiency, partly because they have access to less capital,” said Magdalena Yesil, an entrepreneur, tech investor and author of the book Power Up: How Smart Women Win in the New Economy.

In contrast, some startups in male-dominated Silicon Valley have arguably raised too much money. “The excessive amount of capital in Silicon Valley has allowed a lot of entrepreneurs to run around without much discipline because if you’re not running out of money you’re not constantly asking to be regraded,” venture capitalist Bill Gurley told Bloomberg TV. He has backed companies including Stitch Fix and Uber Technologies Inc.

Lake herself embraces that thinking, telling Entrepreneur magazine earlier this year that she thinks the worst piece of advice for entrepreneurs is to raise as much money as possible.

“There are companies out there that may have failed because they had too much money and never had to think about the economics of their business,” she said.

She didn’t name names, but some notable disappointments in e-commerce include One King’s Lane and Gilt Groupe, which raised more than US$200 million each before being sold for considerably less.

Many of the women who have been able to raise outsized sums of cash did so due to their celebrity status. The Honest Co., which has raised more than US$200 million and is looking for more, was founded by actress Jessica Alba.

Several male-run online commerce companies that started around the same time as Stitch Fix have raised more cash but don’t seem close to an IPO. They include Le Tote, which has raised more than US$50 million, and Poshmark Inc., which has raised more than $150 million.

Of course, male entrepreneurs also embrace the discipline that comes with less cash. Eric Ries discusses the importance of capital efficiency in his widely followed book The Lean Startup.

Yesil, an early backer of Salesforce.com Inc., says tough times can produce extra creativity. After the first dot-com bust, Salesforce couldn’t raise cash from VCs so it was forced to offer discounts in exchange for longer customer contracts. It survived and is now valued at US$77 billion as a public company.

Lake still has work to do – on Stitch Fix and the expectation that CEOs of public companies are men. Stitch Fix shares ended their first day up only 1 per cent, a disappointment for an IPO. Earlier this week, Lake tweeted a screenshot of an automatic suggestion from her iPhone to turn the phrase CEO into an emoji of a blond man.

Lake added a cartoon picture of a woman with dark hair and a note: “Hi! Actually, I look more like this.”

]]>http://business.financialpost.com/entrepreneur/stitch-fixs-katrina-lake-did-more-with-less-cash-from-vcs-1121-bc-stitch-fix-s-katrina-lake-did-more-with-less-cash-bloom-656-words-f-11-17-17-0459-pm/feed0aBLOOMBERG_TECHBloomberg NewsIPOs aren’t just for the super-sized entrepreneurial successeshttp://business.financialpost.com/entrepreneur/small-business/1113-biz-dd-tsx-venture
http://business.financialpost.com/entrepreneur/small-business/1113-biz-dd-tsx-venture#respondWed, 15 Nov 2017 19:54:57 +0000http://business.financialpost.com/?p=1485363It’s been a few years since Hamed Shahbazi, founder and CEO of Vancouver-based TIO Networks, took the company public. He was a mere 23 years of age when he started his company as Info Touch Technologies in 1997 and listed it two years later on the then-fledgling Canadian Venture Exchange (which became the TSX Venture Exchange in 2001). He changed the company’s name in 2006. This year, he closed an acquisition deal with PayPal.

The venture community has made great strides since those days, he says. “The angel environment is stronger, and there are more growth-cap options than ever.” He believes public venture capital is a great opportunity for small business to get access to funds at lower cost and with fewer regulations than their U.S. counterparts.

Canada is relatively unique in having a venture-based exchange, Shahbazi says. “Typically, exchanges will take a company public when it’s a bit more mature and revenue models are established. TSX Venture Exchange is an exception to that, because it allows you to take your company public at an earlier stage and de-risks the investment for early-stage investors. It’s an interesting option.”

For some startups, VC funding is not necessarily the ideal choice, he says. “They can get really deep inside your structure. Public markets are more forgiving, because investors understand you may need to pivot to transform.”

When Shahbazi listed his company with the Venture Exchange, it was dominated by mining startups. But that is far from the case today, says Michael Kousaie, head of business development, technology for TMX Group in Toronto. “Over the last several years, the tech and innovation sector has been … our most active sector for companies going public. Last year we saw a record of 41 new technology and innovation companies going public.”

Almost all listings on TSX Venture, which accounts for half of all exchange listings in Canada, are SMBs, he reports. “It’s good for us to see the transformation (in tech) and good for those investing in the new generation of companies.”

Kousaie says tech funding has become a well-trod path entrepreneurs are trained to understand and follow. “The incubators and accelerators are doing such an important job in forming these businesses.”

But the preconceived path in most people’s minds goes like this: funding from friends and family, angel funding, venture capital. “While venture capital is a hugely important source of funding, it’s not the only one,” Kousaie says. “There are plenty of cases where VC is the best option, but not always. Entrepreneurs need to understand the full range of choices available to them.”

In fact there are even more avenues available for entrepreneurs if they do their homework, he explains. “I would say there are five to 10 options entrepreneurs should be looking at, including government grants, subsidies, venture capital and bootstrapping. Many of these can even complement each other. Founders who take just one path may be doing themselves a disservice.”

The biggest misconception about listing is that you need to be big to go public, he says. “People need to be reminded that in Canada we are fortunate to have one of the only stock exchanges geared to small-cap companies.”

So why do entrepreneurs opt for the IPO route? Kousaie says it’s typically for these three reasons: “First is their desire to retain greater influence over business decisions and gain access to a broader group of investors. Second is that it enhances their profile and credibility with customers and employees. Third, it can facilitate future growth. You can grow through acquisition more easily and efficiently because you can quickly raise capital or use public shares as currency.”

Granted, there are some complexities and costs associated with filing and ongoing reporting requirements. “There may be higher standards of disclosure for a public company,” he says.

For Shahbazi, the disclosure demands were a positive. “It created a discipline around reporting for our management teams. It was a very good road for us and gave us the capital we needed to grow. It’s tough to argue we did the wrong thing.”

To help entrepreneurs in their decision making, TMX.com provides free online toolkits that include a number of educational and information resources on going public, including listing requirements for specific industries. TSXignite.com is another resource that can help founders and entrepreneurs explore their options.

]]>http://business.financialpost.com/entrepreneur/small-business/1113-biz-dd-tsx-venture/feed0aaaGettyImages-525352022denisedeveaufpCanadian tech venture capital funding hits eight-quarter high thanks to AIhttp://business.financialpost.com/technology/1031-biz-wire-vencap
http://business.financialpost.com/technology/1031-biz-wire-vencap#respondThu, 26 Oct 2017 17:58:54 +0000https://financialpostcom.wordpress.com?p=1478311&preview=true&preview_id=1478311Venture-capital funding of Canadian technology startups reached an eight-quarter high, with artificial intelligence soaking up a growing share of the investments, according to an industry report.

Canadian VC-backed companies received $1.1 billion of capital in 81 deals in the third quarter, more than double the prior period’s amount and pushing the total to US$1.8 billion for the year, PricewaterhouseCoopers LLP Canada and tech-data firm CB Insights said Wednesday.

“With this momentum, we look forward to a strong close to the year,” Chris Dulny, national technology sector leader, PwC Canada said in the report. Artificial intelligence is having a record year, having received US$191 million and fintech investment is on also on pace for a solid finish, the report said.

The Canadian technology sector has been gaining momentum. Facebook Inc. and Uber Technologies Inc. have invested in AI labs in the country and Prime Minister Justin Trudeau has provided hundreds of millions of dollars in VC money and support for artificial intelligence research. While there’s no shortage of research and startups in Canada, scaling up hasn’t been easy: Shopify Inc. is the only Canadian tech startup to complete a sizable IPO in the past two years and only a few companies have achieved unicorn status.

“It’s a hard business to raise money in Canada as a venture capitalist,” said Mike Woollatt, chief executive officer of the Canadian Venture Capital and Private Equity Association, as institutions aren’t as active in the sector as in the U.S. “Venture capital funds tend to be much smaller in Canada and, as a result, does that hurt our ability to scale or move quickly? Probably.”

Woollatt said that there are notable exceptions: OMERS Ventures, a unit of the Ontario Municipal Employees Retirement Systems Fund, has about $800 million in assets under management.

Horizontal Play

“I get calls and emails from U.S. investors all the time saying ‘I’ve never invested in Toronto tech before, I’ve heard great things, I want to invest,'” Janet Bannister, partner at Real Ventures, said in a Bloomberg conference in Toronto on Wednesday.

Canada has a real shot at becoming a leader in artificial intelligence, which will become a “horizontal play” affecting every industry and company, she said. “Every single business needs to think about how to take data elsewhere and how to improve the business,” Bannister said.

LeddarTech, eSentire

Some of the biggest deals this quarter included Quebec’s LeddarTech Inc., which raised US$101 million to develop laser-sensing technology, and cybersecurity firm eSentire Inc.’s US$100 million investment from U.S. private equity firm Warburg Pincus, according to the report.

Canadian investors represented the majority of active investors at the seed stage of financing while U.S. investors represented a majority of later-stage deals, the report said.

“Getting U.S. investment is key — it’s an important part of growth in many ways as they provide the connectivity to the Valley,” Woollatt said in a phone interview. But it’s a “massive mistake” to rely solely on foreign investors to fund the Canadian ecosystem. “You take out a key part of the local ecosystem where you have venture-capital managers providing locally a great part of the connectivity, intelligence, and all that stuff that VC brings other than just the dollars.”

Across Canada, Ontario attracted the most financing. Toronto saw US$279 million invested across 32 deals, while funding of Waterloo-based companies soared to US$112 million this quarter from US$11 million last quarter, driven by a large financing round. Vancouver and Montreal activity remained flat relative to the previous quarter.

“The BlackBerry hangover’s over,” Woollatt said.

Bloomberg News

]]>http://business.financialpost.com/technology/1031-biz-wire-vencap/feed0QMI_TS20140529DT36Bloomberg NewsThe key that will open the seed-funding door for your businesshttp://business.financialpost.com/entrepreneur/money/the-key-that-will-open-the-seed-funding-door-for-your-business
http://business.financialpost.com/entrepreneur/money/the-key-that-will-open-the-seed-funding-door-for-your-business#respondMon, 23 Oct 2017 11:49:51 +0000http://business.financialpost.com/?p=1473600You’ve got a great business idea, you’ve built a basic product around it and you’ve proven the concept by selling to a few customers. But now, you’re stuck until you can get the extra capital to expand. What’s next? Welcome to the world of early-stage funding. There’s money out there to kickstart your young company. The trick is getting at it.

Canadian companies hoping for fast growth must progress beyond funding from friends and family. According to the National Angel Capital Organization’s 2015 report, investments from those sources range from $2,000 to $300,000. Other than government grants, a parallel source of funds is the incubator or accelerator, which provides a modicum of funding and a heavy dose of mentorship, sometimes including physical space.

From there, companies with the appropriate characteristics will work their way toward seed funding, in which investors will kick in a larger amount to get the company on its way to an exit strategy.

Along the way, they might seek a cash injection from an angel investor, who commits their own funds to a project. They sometimes work in groups or syndicates, and the angel bridging round can provide from $10,000 through to $11 million, according to NACO’s 2015 report.

Once companies are into the seed funding round, venture capitalists will begin looking at early-stage equity investments. NACO’s report says venture capital injections start at around $2 million, although a lot depends on the funding stage.

VCs take companies through increasingly larger funding stages, ideally reaching an IPO. By that time, many companies will have either failed or lost growth momentum, becoming simply self-sustaining. An alternative exit route is acquisition.

Still, let’s not get ahead of ourselves. Persuading someone to give you the seed cash is the first step. Of all the startups, only a sliver should bother applying, warns Boris Wertz, founder of Vancouver-based seed-stage investor Version One, which dispenses seed funding and advice to promising tech firms. Venture capital isn’t for everyone.

“It’s for the one per cent of high-growth businesses that need equity capital to scale quickly,” he says. “Services businesses and restaurants are not really venture fundable because they can’t grow that quickly.”

Startups in the tech sector – traditionally a high-growth industry — are among the most common seekers of venture capital. But simply being in the right sector isn’t enough to encourage potential investors, Wertz points out.

“Do you have a great story to tell with a pitch slide deck? Do you have a good founding team?” he asks. Other must-haves include solid due diligence. Knowing your company’s numbers and projections is important.

Seed-funding sizes from this data were also in line with Wertz’ own experience. In the 12 months to summer 2016, Pitchbase’s numbers found seed-round sizes in Canada averaged around US$1 million. Wertz puts the bulk of seed rounds for tech firms at up to $2 million today, adding that “there’s more money in the market than there has been for a long time.”

“The amount varies by how early or late (in your development) you are. If you’re later, it might be bigger. It also depends on how good the entrepreneurs are at fundraising,” Wertz adds.

“And then lastly, sometimes there’s just a dynamic where you’re trying to raise $1.5 million and you get tons of interest, and before you know it, it’s a $2.5 million seed round.”

That seems to have been the case with insurance tech firm Finaeo. It just scored a $2.25 million funding round, which was oversubscribed.

One of the best rules for would-be unicorn companies seeking early-stage tech funding? Don’t go in cold. This is something that McLeod has told the Financial Post in the past, and something that Wertz echoes.

“Look for a warm introduction. It’s very rare you’d get someone who would answer to a cold email,” Wertz says. “In the end, especially at seed stage, they’re investing 95 per cent in the people. If you come from someone we already know who vouches for you, then that’s already a huge sign of confidence for us.”

That’s the bottom line with early-stage funding: it’s all about relationships. Ideas are a commodity, but when you’re dealing with cold hard cash, it’s the people behind them that matter.

Sunil Sharma says it’s time for accelerators to share data on whether the model works.

In an empty office in the downtown Toronto building that will become home to Techstars LLC’s first foray into Canada, managing director Sunil Sharma is contemplating an important question.

Temporarily putting aside the hundreds of applications from startups from around the world that want to join the accelerator’s first Toronto cohort, he’s inclined to tear down all the glass-walled offices lining the floor, so that the winning companies can work together in one large, open space. But first, an employee of the building’s management pops in with an even more pressing matter.

“Are you guys gonna have beer on the floor?” he asked. “You’re allowed to, but some people don’t want to.”

Sharma is not the only one offering beer, trendy open-concept offices and other amenities in an effort to attract and then nurture successful startups. Plenty of governments and private investors are also pouring massive amounts of money into accelerators, incubators and innovation hubs in the hopes of launching the next Uber Technologies Inc. or Airbnb Inc.

In Canada, such success stories are rare. The biggest tech winners, such as Shopify Inc., have come from outside the incubator and accelerator system. Research suggests top-tier, internationally renowned accelerators such as Techstars give their startups a meaningful advantage, but it’s less clear whether other models are worth the time and money.

Sharma believes all these types of organizations can have benefits, especially the classic three-month accelerator style fuelled by private-sector funding. Everyone’s interests are aligned when investors take equity stakes in startups participating in accelerator programs, he says.

“We think it’s a two-way street. We have to earn our equity in these companies,” Sharma said. “It’s needed to have a Techstars model in Canada, just as it is in many other countries. I think you’ll start to see more.”

The basic idea behind accelerators and incubators is to identify companies with the potential for massive growth, provide them with office space and connections, and hopefully help them grow faster than they would have otherwise.

The risk, however, is propping up mediocre companies that would fail in the free market, thereby siphoning revenue away from competitors and stunting their growth.

Over the past year, Canada has seen a flurry of both public and private investment in incubators, accelerators and tech research hubs.

For example, Montreal-based research hub and incubator Element AI in June raised $135 million from major tech companies including Microsoft Corp., Intel Corp. and Nvidia Corp.

Royal Bank of Canada, Magna International Inc. and Bank of Nova Scotia announced contributions to another $5-million fund for incubating artificial intelligence startups called NextAI in January.

Shopify’s Ottawa offices on Elgin Street. Shopify found its success outside of the tech accelerator system.

And the federal government is taking applications for $950 million in seed money to create research and innovation “superclusters” across the country, in the hopes of nurturing Silicon Valley-like regional hubs of startup activity.

The Justin Trudeau Liberals have made innovation a key part of their policy agenda, with $1.18 billion earmarked for skills and innovation in the 2017 budget.

On Tuesday, Innovation Minister Navdeep Bains announced nine finalists for for the federal government’s supercluster funding, focusing on such areas as manufacturing, artificial intelligence and ocean technologies.

The superclusters idea isn’t new: National Research Council Canada has been funding similar regional “technology cluster initiatives” since the early 2000s.

A 2010 NRC evaluation of the performance of its technology clusters determined “a number of challenges remain” when it comes to helping companies located there grow, cautioning “expectations regarding firms should remain realistic.”

The report cited scarce investment capital, insufficient incubation space and expensive technology as among those challenges.

John Stokes, a partner at Montreal-based venture-capital firm Real Ventures, which has invested in Techstars and Element AI and runs the accelerator FounderFuel, said he’s waiting to see how the supercluster strategy plays out before passing judgment.

But he sees a win-win situation when it comes to making private investments in accelerators.

Founders get capital early in their life cycle, support and the brand cachet of the accelerator, while investors streamline the scouting process to take bets on emerging technologies.

“It allows you to deploy both money and support in order to help companies on their path to hyper-growth success,” Stokes said. “From an investor point of view, it is powerful.”

In Canada, however, privately funded accelerators that take an equity stake in startups are relatively rare.

Incubators and innovation hubs — which provide office space, resources and mentorship, but don’t typically take equity or culminate in a graduation “demo day” for investors — are much more common, and most of them are supported by taxpayer dollars.

A prominent innovation hub is Toronto’s MaRS Discovery District, a government-funded charity that aims to help companies grow by providing them equipment and subsidized rent in a location right next to major hospitals and universities.

The organization was the focus of controversy a few years ago after its new 20-storey tower needed to be bailed out by three government loans, but those loans have been repaid.

In addition to startups, MaRS houses major companies such as Facebook Inc. and the Canadian Imperial Bank of Commerce in the hopes they will forge partnerships with smaller companies under the same roof.

Salim Teja, president of venture services at MaRS, said the innovation hub’s track record speaks for itself, with MaRS-supported ventures raising $785 million in 2015 and generating $398 million in revenue.

“Government is really trying to catalyze partnerships between small companies and large companies to really focus on creating real value in the marketplace and solving big, important problems,” Teja said. “We hear often from VCs that companies that have gone through programs like ours are much better prepared for success.”

A man participates in a virtual reality demonstration at the MaRS discovery district in Toronto. MaRS is a prominent government-funded innovation hub.

Of course, anecdotal evidence from venture capitalists is not the same thing as hard evidence. That MaRS discloses the revenue and funding generated by participating companies is unusual, since most Canadian startup supporters prefer to keep such metrics to themselves.

MaRS published a report on Canadian accelerators in 2013 and came to the conclusion that “little is known how well accelerators actually perform.”

Accelerator directors interviewed by the report’s authors cited a lack of resources as the main reason for failing to track the performance of alumni startups, but there were other reasons, too.

The report quoted one accelerator director whose response when asked if he or she would consider publishing results in the future was, “When they’re good.” It quoted another director who was concerned data showing poor results would make it harder to receive government funding.

Sharma, who is also chair of the board of the Canadian Acceleration and Business Incubation Association, said the organization would gladly accept public funding to collect such data. He said it doesn’t make sense to pour funding into entities that are supposed to support startups without measuring how those startups fare.

“I just believe there should be a real rigour and analysis of this,” Sharma said. “By now, there should be so much data available, it should be analyzed in a very serious way about what are the outcomes and how does it trace back to the financial support.”

For founders, there’s no question that a prominent accelerator can provide a serious boost. Montreal-based bus rental startup Bus.com parlayed its graduation from FounderFuel into acceptance at San Francisco’s Y Combinator, widely considered the top accelerator in the world.

Bus.com chief executive Kyle Boulay said the relationships he built at Y Combinator and FounderFuel helped him raise a US$5-million Series A round in April. He said he regularly recommends accelerators to other entrepreneurs.

“For first-time founders such as myself and my co-founder, it’s always a really big asset to work closely under people who have done it before,” Boulay said. “The startup mountain is a very difficult one to climb.”

Stokes, the Real Ventures partner, said he welcomes government action to help make it less difficult to climb that mountain. He said it’s important for governments to show they support entrepreneurship, but, so far, publicly funded incubators and hubs haven’t posed much of a competitive threat.

“As a taxpayer, I would love to be concerned about the competition” Stokes said. “That would mean the government money is being used in a way I think is very impactful.”

]]>http://business.financialpost.com/technology/tech-accelerators-are-booming-whats-not-clear-is-whether-they-work/feed0fp1013-gs-accelerators-wordsclairebrownellHow grown men behave when pitched for VC funding for smart breast pumphttp://business.financialpost.com/entrepreneur/fp-startups/startup-behind-smart-breast-pump-mothers-love-it-vcs-dont-1
Wed, 27 Sep 2017 15:10:24 +0000https://financialpostcom.wordpress.com?p=1439846&preview=true&preview_id=1439846Before her first meetings with venture capitalists, Janica Alvarez thought she could have a professional discussion about breasts. Alvarez was trying to raise money for her startup Naya Health Inc., which makes a smart breast pump. Naya has secured approval from the U.S. Food and Drug Administration, achieving that milestone much earlier than most young companies.

But the conversations weren’t what she expected. Investors wanted to know how she’d be able to run a startup while also raising her children. Another commented on her body and asked how a mother of three stays in such good shape. Others said they were too grossed out to touch her product or pleaded ignorance about how a breast pump works. “Investors would say, ‘Let me go talk to my sister; let me go talk to my wife,'” Alvarez said.

She and her husband, Jeffrey Alvarez, managed to raise US$6.5 million from investors after starting the business together in 2013. But they’ve recently hit a wall. With few VCs willing to fund the product, they’re turning to Kickstarter in the hopes of keeping their company running. The campaign, with an initial goal of US$100,000, started Sept. 21. “If VCs don’t want this, then we know parents and mothers do,” Alvarez said.

The U.S. venture capital industry is 93 per cent male and facing heightened scrutiny for the sometimes-fraught relations with Silicon Valley’s few female entrepreneurs. Alvarez’s experience illustrates how getting venture funding can be even harder when your product isn’t one men use.

The breast pump market is dominated by Swiss manufacturer Medela LLC, which got a boost in the U.S. from an Obamacare mandate that insurance companies must cover the cost of pumps for new moms. Most devices use hard plastic cups and an air suction system. They’re often loud and sometimes painful.

The Naya’s soft suction cup mimics the feel of a baby’s mouth and distributes the suction over a broader area of a woman’s breast. Alvarez said the Naya delivers 30 per cent more breast milk and is 20 per cent faster than alternatives, thanks to a unique water-based system. The company is also planning to sell a smart bottle that will be able to track the volume, calorie count and fat content of breast milk and input them into an app. Mothers would be able to use the software to monitor how much they’re pumping, how much the baby is eating and how much milk is left in storage.

Customers are asked to pay a serious premium for those features. The company was selling the Naya for US$999 until last week, when it lowered the price temporarily to US$649. A typical Medela pump is about US$250. Naya is now pitching a lower-end model, without a rechargeable battery or certain accessories, for US$399, though the price will go up by US$100 eventually. The pump is partly covered under certain insurance plans and is free for military servicewomen. Naya plans to offer rentals in the future for those who can’t afford the upfront cost.

Despite the price, Naya has won favorable coverage from Wired and the New York Times. There’s a dedicated fan base among mothers who can afford it, like Emilee Stucky, a 29-year-old new mom in Wichita, Kan., with seven-month-old twin daughters. “The comfort alone is worth the investment,” said Stucky, who works as a freelance calligrapher. “In a world where pumping is already so inconvenient for women, the Naya breast pump makes it so convenient and so comfortable.”

Like most VCs Alvarez met with, Charles Hudson didn’t know anything about breast pumps. Hudson, a managing partner at Precursor Ventures, said he decided to make a seed investment in Naya after doing some research with moms. “We were expecting our first child, and I started asking around and asked, ‘Do you like your current product?'” he said. “Everyone said no.” But Hudson acknowledged that Naya’s business is a tough sell to many VCs. Beyond being a foreign industry, it requires developing hardware, which can get expensive fast compared with making an app.

During one pitch meeting, Alvarez recalled one man saying, “I’m not touching that; that’s disgusting.” In another meeting, investors Googled the product and ended up on a porn site. They lingered on the page and started cracking jokes, she said. “I felt like I was in the middle of a fraternity,” Alvarez said. “I expect more from grown men.”

Alvarez decided to start bringing her husband with her to pitch meetings. Unlike the CEO, he said investors never made disparaging comments or asked about the challenges of running a company as a parent. “We made the decision that it would be best if both of us would always go to these meetings,” said Jeffrey Alvarez, a longtime medical-device engineer who’s Naya’s senior director of research development. “They would treat her like a little girl trying to play a man’s game.”

But the couple still couldn’t raise money. As cash got tight, the founders asked their eight full-time employees, who are mostly in the San Francisco Bay area, to work for minimum wage, which would buy the company a few months of extra runway. The staff agreed. The Alvarezes, meanwhile, traded their four-bedroom home for a rental that’s half the size.

Things haven’t been much easier for other startups in their small industry. Moxxly and Exploramed NC7 Inc., two other companies building smart breast pumps, are yet to release their pump products. The companies hoped to stand out with features not found in competing devices. Moxxly, which is working on a way to pump discreetly under a bra, sold itself to Medela in June for an undisclosed price.

Shortly before Alvarez was set to give a recent on-stage pitch, she ran into a female VC, who offered some advice: Only wear black and gray, don’t use nail polish, don’t smile or laugh too much, and keep your hair back in a pony tail. Alvarez immediately took off her jewellery and pulled her hair back before giving the presentation. She said: “It’s hard when you’re told you can’t be yourself because you have to play the game.”

The investment is said to be the second-largest that has been made by Portag3 Ventures — a fund sponsored by Power Financial Corp., IGM Financial Inc. and Great-West Lifeco Inc. — since its funding of robo-adviser Wealthsimple, which said in May it had received about $100 million from the Power Financial “group of companies.” As such, the $8-million in funding also marks another foray by traditional financial services firms into the enticing fintech sector.

Daniel Eberhard, Koho founder and chief executive, said the company has been growing quickly since its public launch in March, but had been doing so with only $2.5 million raised over the past two years. The company said it would use the funding from Portag3 to scale its technology platform and expand its engineering and operations team at a new Toronto headquarters.

“This is really kind of the scale-up round,” said Eberhard in an interview. “And so, with this we take what is effectively a proof-of-concept, it’s working, it’s growing pretty quickly, and really get to add a lot of fuel to the fire in terms of expanding the team and certainly a bigger push towards marketing and top-line growth.”

While it is not a financial institution, Koho offers users a mobile app and mostly fee-free spending account, which customers can use for e-transfers, paying bills and setting savings goals.

After sign-up, users are also sent their Koho card, which is a pre-paid Visa card issued by Vancouver-based Peoples Trust Company, the federally insured financial institution that also issues Koho’s spending accounts. The card can be used for purchases anywhere Visa is accepted, and Koho customers can also access more than 8,000 ATMs without being charged a fee.

“The thing that we talk about a lot internally is how do we give people a sense of autonomy and control over their financial life,” said Eberhard. “That is predicated on tools, which help people save money and help people better understand where and how their money is being spent.”

Koho has now raised $10.6 million from Portag3 and others. Portag3 has been involved in similar investments in fintech-geared venture funds such as Diagram, apart from its investment in Wealthsimple.

“We very much invest in leaders and we watched Daniel and his team mature and gain more confidence in their execution,” said Adam Felesky, president of Portag3 Ventures. “We believe in their mission and we believe and have confidence now that, with these proceeds, they can achieve ultimate objectives.”

Eberhard said the inspiration for Koho stemmed from frustration caused by the traditional fee structure and technology available to him as a younger Canadian consumer. However, he also said that the company does have both younger and older customers.

“Our sweet spot…is kind of that mobile generation,” he said. “So most of our customers are on average around 29 years old.”

Koho also announced Monday that Paul Desmarais III, executive chairman of Portag3 and senior vice-president of Montreal-based Power Financial Corp., Felesky, the president of Portag3 and the former chief executive of Horizon ETFs, and Michael Katchen, co-founder and chief exec of robo-investment adviser Wealthsimple, have joined the company’s board of directors.

“We’re thrilled to support this promising fintech company,” said Desmarais III in a release. “We look forward to working with Daniel and the Koho team to bring Canadians more inclusion, transparency and access to great financial services.”

]]>http://business.financialpost.com/business/koho-locks-down-8m-investment-from-desmarais-backed-venture-fund/feed0ID: 00065774AgzochodneAlto Ventures (TSXV: ATV) is Being Valued at Just $4 EV/Gold Ouncehttp://business.financialpost.com/small-cap-investing/alto-ventures-tsxv-atv-is-being-valued-at-just-4-evgold-ounce
Thu, 07 Sep 2017 17:54:15 +0000http://business.financialpost.com/?p=1432303Ubika Research has released an analyst note on Alto Ventures Ltd. (TSXV: ATV), an exploration and development company focused on three core gold properties in Canada. Alto Ventures recently sold its Windfall East Project in Quebec to Beaufield Resources, boosting its treasury for exploration. Alto is currently being valued at just $4 EV/Ounce Au, which is significantly lower than the historical average acquisition cost of $40-60 EV/Ounce Au for gold “in-the-ground” resources for companies at the Exploration stage.

]]>FP Top Story imagespecialfpTop Performing Canadian Gold Stockshttp://business.financialpost.com/small-cap-investing/top-performing-canadian-gold-stocks
Thu, 24 Aug 2017 17:36:47 +0000http://business.financialpost.com/?p=1425789Today we have identified five Canadian gold stocks that delivered price appreciation of between 20%-615% over the past three months. To avoid low-base effect of penny gold stocks, we have taken stocks above $1 for the purpose, with market caps ranging between $80 million and $3.0 billion. With recent global sell-off in equity markets amid concerns of nuclear threat from North Korea, the yellow metal continues to surge on safe haven buying and currently trades ($1,293/oz) near its yearly high of $1,295/oz reached in June 2017.